Thursday brought another round of economic data to fuel the raging debate about whether the U.S. economy is on the mend, heading for a double-dip or still in recession.

If you step back from the day-to-day (and minute-by-minute) focus on the latest data, “the state of the economy is…gradually deteriorating,” says David Levy, chairman of the Jerome Levy Forecasting Center. “We had a very weak recovery and we are more likely than not going to have another recession in 2011.”

Levy, who puts the odds of a true double-dip at 60%, says recent talk of a recovery – which not coincidentally corresponded with a quick rally in the stock market – is wrong for the following reasons:

— Housing is “clearly deteriorating again” after the first-time homeowner tax credit. (Indeed, RealtyTrac reports U.S. foreclosures rose 25% in August vs. a year ago to the highest level since the housing bubble burst.)

— Consumer spending is stagnant. Levy attributes the recent uptick in retail sales to purchases by “mostly high income people who had held off during the crisis.”

With 25 million un- and under-employed Americans and 1 in 7 living in poverty, the U.S. economy is even more dependent on spending by the wealthiest; that’s a big reason Levy things it’s wrong to let the Bush tax cuts expire for families making over $250,000 annually.

“Clearly the symptoms of the economic problems [are] being confused more and more with the disease,” he says. “The deficit didn’t cause our economic weakness. It was a collapse in private investment, asset deflation [and] debt problems that caused weakness and a falloff in [government] revenues.”

With tax receipts down and the government spending more to offset the deleveraging of the private sector – and on social safety nets like unemployment – the deficit has soared.

Judging by the most recent TIC data, projections for trillion-dollar annual deficits for the next decade have not caused foreigners to flee from U.S. assets, including Treasuries, as the mega-bears have long predicted.

But if we listen to the doomsayers and “try to do the Herbert Hoover route and cut the deficit further then it will backfire,” says Levy, who is bearish for reasons other than the deficit.